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Published: Fri, 02 Feb 2018

Consider whether measures imposed by each member states are justified

The measure contested here is the charge imposed by the French authorities of 2 euros per consignment for the testing of sugar content in Jessica’s jam. The charge by the French appears to be a customs duty. This is a fiscal barrier to trade as it is raising money. The measure imposed is restriction on imports by the French custom authorities. The articles which are applicable here is Article 28 and Article 30 of the Treaty on the functioning of the European Union (TFEU) [1] . The European Court of Justice defined goods in [2] as “products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions.” There is no doubt that Jessica’s jams are goods.

Article 28 TFEU establishes a Customs Union. Customs Union is defined as “covering all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.” Meanwhile, Article 30 TFEU provides that “Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties in fiscal nature.” As can be seen the treaty places a total ban on customs duties in Article 30 TFEU.

The law further goes on to say that not only customs duties are prohibited but also charges having equivalent effect. Both these terms are not defined in the treaty but are defined in Commission v Italy [3] as “any pecuniary charge, however small and whatever its designation and mode of application which is imposed unilaterally on domestic or foreign goods by reason of the fact that they cross a frontier.”

Following case laws, the courts have been consistent in the absolute abolishment of customs duties and charges having equivalent effect, no matter what the purported reason for the charge is. The fact that the charges were to test the sugar content of the jam in order to determine its suitability for the French market is baseless.

For example in Social Fonds Voor de Diamantarbeiders v SA [4] , in which a 0.33 percent charge on imported diamonds was paid into a social fund for workers in the diamond mining industry in Africa. The Court of Justice admitted that the charge was for a good cause but it was still considered as a charge having equivalent effect to customs duty and thus prohibited by the Treaty. Also the case of Steinike and Weinlig [5] , it was held that the prohibition applies so long as a duty or charge imposed by reason of goods crossing a frontier. It does not actually have to be imposed at frontier.

Therefore, the scope of prohibition is very wide and it is safe to say that the courts have been very reluctant to find a charge outside of Article 30 TFEU. On the facts, the charges were made when Jessica’s jams were entering France thereby crossing the frontier. It appears that this charge would constitute a custom duty. The French authorities would be in breach of Article 28 and Article 30 TFEU. However, there are certain conditions charges may be acceptable. Firstly; where there is service rendered directly to the importer. Secondly, if they are mandatory inspections within the EU law; they may be charged for as in Commission v Germany [6] . None of these two exceptions are applicable on our facts.

b)

In contrast to custom duties and charge having equivalent effect, the courts have been lenient on taxation unless it is of discriminatory nature. On the facts, the measure contested is the 20% tax on all sweet products including jam by the Lithuanian government; while a rebate is given on fruit spread (assuming it is a local delicacy in Lithuania). This measure is of a fiscal nature as it is raising money and is a restriction based on imports. The articles applicable here are 110(1) TFEU and 110(2) TFEU.

A genuine tax was defined in Commission v France, [7] as “a general system of internal dues [i.e. a tax] applying systematically to categories of products in accordance with objective criteria irrespective of the origins of the products.”

Article 110(1) prevents Member States from imposing on imports internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. This prohibits discrimination in favour of the domestic products. Furthermore, Article 110(2) prohibits Member States from imposing on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products. This serves to cover products that may be different but are nevertheless in competition with the domestic products.

The two key concepts are therefore similarity and product competition. The Court of Justice stated that similar products in context of 110(1) TFEU are products that have similar characteristics and meet the same needs from the point of view of consumers [8] .

It would appear that the Lithuanian government are imposing a discriminatory higher tax on Jessica’s jam since it is imported. We are not told whether Lithuania are producing jams and if they are will the same taxation scheme apply to domestic products as well has to be considered. On our facts, it has to be distinguished whether jam and fruit spread are similar products or merely in competition of another.

In John Walker v Ministeriet for Skatter [9] , the issue was whether liquer fruit wine was similar to whisky. The court analysed the objective characteristics of the products, including the alcohol contents, methods of production and consumer perceptions. It was held that they were not similar due to different alcoholic contents and manufacturing processes.

In my opinion, it can be said that jam and fruit spread are not similar but they are nevertheless in competition with another. They might not be similar due to fruit and sugar content and methods of production. However, the cross elasticity of demand of both these products is high. If a consumer is unable to get fruit spread they would most probably go for jam. Alternatively, it can also be argued they are similar products because they meet the same needs from the view of consumers. It can be difficult to distinguish whether goods are similar or not similar because the distinction can be artificial. Therefore it is up to the courts to decide whether it is or not.

In conclusion, the imposing of 20% tax on jam and a rebate on less sweet products such as fruit spread would be a discriminatory tax which hinders the free movement of goods. It would be favouring fruit spread which is a domestic product and discriminating against imported goods. Lithuania would be in breach of Article 110(1) TFEU and 110(2) TFEU.

c)

The measure contested here is the ban by the Spanish authorities on Jessica’s jam because it does not meet the required 60 % fruit content. Jessica’s jam only has 40 % fruit content. This is a non fiscal barrier to trade as it does not involve the raising of money. On the facts, it is a restriction on imports thus Art 34 TFEU will apply. Article 34 TFEU provides that “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.”Now it has to be determined whether the obstacle Jessica is faced is either a Quantitative restriction or a measure having equivalent effect to a Quantitative restriction. On the facts, there is no capped amount on the goods by the Spanish therefore it cannot be a quantitative restriction or a quota. Therefore, the measure we are faced is a measure having an equivalent effect to a quantitative restriction.

There is no treaty definition of “measures having equivalent effect”, thus case laws will be considered to describe this rather vague term. For example in, Procureur du Roi v Dassonville [10] , measures having equivalent effect to quantitative restrictions were defined as

“All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra – Community trade. [11] “

This definition is a very broad definition which indicates that the Court of Justice ensures that very few measures will be permitted to hinder the free movement of goods. Hence it was the effect of the trading rule to be considered and not its purpose. On our facts, it bears a striking resemblance to the case of Cassis de Dijon [12] .In Cassis de Dijon, a rule preventing the sale in Germany of all liquors of less than 25% alcohol were held to infringe Article 28 EC (now Article 34 TFEU).The German refuse to permit the French Cassis (a blackcurrant liquor) which was of insufficient alcohol content. The law did not discriminate as it applies domestic and foreign goods. The measure here was indistinctively applicable as it applies equally to domestic and imported goods. Nevertheless the ECJ held that this kind of rules can create an obstacle to trade between member states. This is due to all 27 member states may all have different trading rules. It could suggest that the trader would have to comply with 27 sets of rules if they intend to sell the products throughout the European Union. Therefore, the European Court of Justice removed that obstacle by introducing what now in the present is the mutual recognition principle. This principle provides that so long as a product is lawfully produced and marketed in one member state than there is no reason for it not to be sold, in any other member state without having to comply with any additional requirement [13] .

Applying this to our facts, the measure in our case would be indistinctively applicable because according to the Spanish food regulations all jam must be made with 60 % fruit content. All jam would presumably be for both domestic and imported jam therefore the Spanish law does not discriminate.

The case of Commission v Spain [14] and Commission v Italy [15] explains the mutual recognition principle. Here the Spanish and Italian legislation provided that the only vegetable fat allowed in chocolates is cocoa butter. Irish and British chocolates contained other types of vegetable fats. Therefore for it to be sold in Italy and in Spain, British and Irish chocolates had to be renames chocolate substitutes. The court held that so long as the goods are lawfully marketed in one member state no member state can prevent it sold on their state unless there is a valid mandatory requirement.

Similarly to our facts, Jessica would not have a problem in marketing her jams to Spain following the mutual recognition rule.

Also in our case the Spanish authorities have informed Jessica her jams will have to be marketed and sold as ‘sugar spread’. The reason for this is to protect consumers against unfair commercial practices. This would not suffice as a valid mandatory requirement because there is a more proportionate approach such as labelling. The change of jam to sugar spread will cost Jessica extra repackaging costs and it would also cause her product to be unfavourable in the eyes of consumers.

It is harsh on the part of Spain to impose this as it creates obstacle to the free movement of goods. A better and more proportionate approach is to use labelling on the jams which will specify the exact fruit content and ingredients used so that the consumers can be informed and not be misled. Consumers are able to read on their own and make a choice. It would appear that the Spanish regulation would not be justified and be in violation of Article 34 TFEU.

d)

Here the measure contested is the ban on the advertising of sweet products to the children by the Sweden. This is a non fiscal barrier and it is restricting imports. Jessica is not faced with an obstacle of intrinsic characteristics of goods here such as composition, packaging and size but what is known as selling arrangements. Selling arrangements are basically how a product is sold are subject to national rules. For example if there is a law that you cannot buy alcohol unless you are over 18 years old.

In the case of Keck and Mithouard [16] , the European Court of Justice stated that “national provisions restricting or prohibiting certain selling arrangements are not such as to hinder, directly or indirectly, actually or potentially, trade between Member States, so long as those so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law or in fact, the marketing of domestic products and those from other Member States.”

Basically, this means that the court allows selling arrangements and recognises that it does not hinder the free movement of goods between Member States. Member States are allowed to impose their own selling arrangements and by doing so it would not fall within the scope of Article 34 and Article 35 of TFEU.

In the years of Keck, the court had to face many difficult issues. Firstly the issue was what constitutes ‘selling arrangements’. Secondly, another issue arose was whether a national measure which reduced the sale of imported goods because it limited the opportunities in which outlets could open was a quantitative restriction. In the case of Semeraro Casa Uno Srl v Sindaco Del Commune di Erbusco [17] , the ECJ held that merely because the national measures limit the volume of imports that it is not a ground for classifying a measure as quantitative restriction in situations where they affect domestic traders and importers in the same manner in law and in fact.

However, post Keck and Mithouard the European Court of Justice had to re-evaluate its decisions based on new developments. For example, in the case of Konsumentombudsmannen v De Agostini [18] where the ECJ had to consider whether the ban on television advertising on certain products to under 12 year olds which following Keck would fall outside Article 28 EC (now Article 34 TFEU).Ultimately, it was held that it was for the national court to decide. Nevertheless, it conceded that where the national measure does not apply to all traders to the same extent then the measure will be prohibited under Article 28 EC (now Article 34 TFEU).Thus, and then the burden would shift to the member states to justify it under the Cassis principles. This has signified that the ECJ may be abandoning its previous approach in Keck test where there was no discrimination in law, but also looking to see whether the measure discriminates against imports as a fact.

On our facts, although selling arrangements are allowed Jessica would have a remedy under the Treaty. Selling arrangements will also be caught under the treaties if they have unequal effect and disadvantage the importer more than the domestic producers.

This can be proven in the following case. In Konsumentombudsmannen v Gourmet International Products [19] , the European Court of Justice said that “a prohibition on all advertising … is liable to impede access to the market by products from other member states more then it impedes access by domestic products, with which consumers are instantly more familiar.”

Applying this to our facts, the Swedish ban will fall foul under the treaty if it can be proven that the ban imposed on advertising affected imported goods more than domestic. There is not enough evidence in the question to conclude whether the ban imposed by Sweden affected both domestic and also imported goods.

However based on Gourmet, the ban will not be permissible if it is a complete ban. Most likely, the Swedish ban on advertising of sweets to children would be prohibited under the treaty as it is a complete ban.

e)

The measure contested here would be the ban on sale of Jessica’s jam by Greek authorities. This is a non fiscal barrier and it is restricting imports. The article applicable here are Article 34(restriction on imports) and Article 36 TFEU which constitutes derogations of non-fiscal barriers to trade. We are told that Jessica’s jams were ban due to the fact that it considered added colouring which according to some Greek researchers, may be dangerous to health if consumed excessively.

Article 34 TFEU provides that “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States”. The Greek authorities are in breach of Art 34 TFEU. By imposing a ban on the jams they are restricting imports. It looks like on our facts the measure is a quantitative restriction.

Nevertheless, the meaning of quantitative restriction will be considered. There is no definitions provided in the Treaty, but in the case of Geddo v Ente Nationale Risi [20] this term was defined. It was defined as “any measures, which amount to a total or partial restraint on imports or exports of goods in transit.”On our facts, there is a total ban on Jessica’s jam therefore it would be a quantitative restriction. Quantitative restrictions are unlawful unless justified by express treaty derogation under Article 36 TFEU.

On the facts, the Greek would wish to justify its ban based on the derogations provided by Article 36 TFEU. Article 36 does not require the restriction to trade to be indistinctively applicable in contrast to Cassis mandatory requirements. It is also mentioned in this article that the derogation must be proportionate and go beyond the objectives of the article.

The most appropriate exception the Greek would argue is that on protection of health and life of humans, animals or plants. Article 36 TFEU provides an exhaustive list and each exception would be strictly construed.

On the facts, the ban of sale of Jessica’s jam was because it may be dangerous to health. Therefore derogation under protection of health would be likely. The derogation by the Greek would most likely fail due to the fact that there must be genuine health alert. The ban of sale

due to some researchers suggesting that the colouring in jam would be dangerous to health if used excessively would not be justified. There is no genuine evidence of this such as an health alert.

For example in Commission v UK (1982), where the United Kingdom had banned imports of turkey from France in order to prevent the spreading of Newcastle’s disease. The Court of Justice held that the ban was not justified because there was no recent outbreak of the disease in France.

A case similar to our situation is Officier van Justitie v Sandoz (1983).

Applying these cases to our facts, the ban imposed by Greek would not be justified because it is not proportionate and there is no substantial medical evidence to prove that the colouring in Jessica’s jam is dangerous to health and thus would be a breach of Article 34 TFEU.

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